Tuesday, January 15, 2013

A Phone Call I Don't Want to Make

As you may remember a few short weeks ago, we were able to hit a financial milestone; we became consumer debt free. With things being what they were for bringing in an income, we decided to get a loan for a new vehicle. Some would definitely say this was incurring more consumer debt, and I suppose technically it is. However, my ability to earn an income is dependant on my vehicle of choice, so the decision to do so was a no-brainer for me.

I would love to say we have no debt at all, other than the vehicle, but I would be lying. On one of the side pages, Expected Debt Payoff Dates, you will see that we still have some lingering debt, none of which is considered 'consumer debt'; at least not by us.

First and foremost is the money owing to The Tax Man. I have been having difficulty for the last three years determining how much income tax I will owe because my income fluctuates from year to year. Part of the problem in the beginning was that I never gave any thought that I would owe money, therefore I never saved any to give to the Tax Man. Gosh was that dumb!

Fast forward to yesterday. I get a nice letter in the mail from CRA saying they have tried to contact me with regard to my outstanding balance. (For the record, I haven't had any contact with them No phone calls, no voicemail, just my regular statements in the mail.) It seems that the Tax Man has just about run out of patience, and wants me to make a deal with him to get my taxes paid. Just in time to add on the 2012 taxes owing too. Woo hoo, am I excited! (If you didn't catch the sarcasm there.....)

I know that when I do call them, they will want me to commit to a repayment plan that will have all outstanding debt paid off in 12 months. Truthfully, I have absolutely no idea how I'm going to manage adding an additional $1000 per month payment to my already difficult budget. I don't know how to even incorporate an additional $500 payment to our budget. I guess its time to go back to the basics, look over the budget, and trim, trim, trim. I'll have to put every extra dollar not already earmarked for something toward this debt. The alternative is rather scary, to say the least. Do you have any idea what CRA can do to someone when the demand their money? It sure ain't pretty, I'll tell you.

I will call them and see what we can figure out. Hopefully, they will take it easy on me until I can get this mess sorted out.


  1. It is very difficult to project or budget in that case with an up & down income, or I find it to be so. If someone has a miracle way on how to do it it I would love to know. They will accept whatever you can give them I believe with extra whenever you can throw them that too. Call and hopefully you can speak to someone who doesn't think it is their money you are withholding from them Ha! Hope it goes well for you.

  2. Oh my! What a challenge! good luck!

  3. Sadly, I think the quicker you make the call, the better. Not knowing won't make it go away, and waiting may only make it worse. It is hard to figure out what Tax man will come up with next, but try to do some research before you give them a call... if the solutions they offer you dont work, maybe you can offer them some that works for both.

  4. I agree with Tanner. Like ripping off a baindaid! You are going to have to bite the bullet. Can your accountant not offer you a formula or some guidelines for income tax witholding that you can do???
    I hope that you can get a budget that works! Ask the tax guy too, what you can do now, to avoid having this ever again. (All in a sweet little voice;))

  5. I am so sorry Eboo! It must be really tough to have self employment income and budget for things like HST and the evil tax ppl CRA...I have been working technically part time the last 3 months but with full time hours and I have been wondering how this is going to effect me tax wise this year...ugh

  6. I can definitely feel the tax pain, & have been in similar situations of not knowing, & then being caught off guard. A couple of things I would do - 1) call & find out what the smallest repayment they will offer. HOpefully you can increase the payments each month, but that will give you a safety net. Can you make extra side income? I'm not sure if that's possible given your job schedule. 2) Start setting aside money for this year's payment, and consult an accountant for a way to estimate (if that information isn't readily available online somewhere.)

    Wishing you luck!